Magnum Hunter Resources (ticker: MHR) is an oil and natural gas exploration and production company active in three shale resource plays in North America: the Marcellus Shale, Utica Shale and the Williston Basin/Bakken Shale. The company’s growth platform is supported with approximately 350,000 net acres spread across its core operating regions.
In line with its planned non-core assets sale to streamline the balance sheet, on September 2, 2013, Magnum Hunter filed an 8K announcing the sale of non-operated working interest in approximately 51,495 gross (14,500 net) leasehold acres in Burke County, North Dakota to Oasis Petroleum (ticker: OAS) for $32.5 million.
The agreement, which includes 120 BOEPD of average production, is expected to close on or before September 27, 2013, and will be effective as of July 1, 2013. Based on the purchase price, Magnum Hunter Resources sold the properties for $2,241 per acre, or $270,833 per flowing BOEPD.
Other recent Bakken deals include Whiting’s purchase of 17,282 net acres (92% HBP) in Williams and McKenzie counties of North Dakota, and Roosevelt and Richland counties of Montana, for $260 million. Based on the purchase price, that transaction is valued at $15,044 per acre, $107,438 per flowing BOEPD, or $15.20 per proved BOE.
Magnum Hunter’s non-operated asset sale in the Burke County, North Dakota is the first of several proposed non-core asset sales by the company. Management is expected to announce a total of $200 million non-core asset sales in the coming months with proceeds dedicated toward the company’s debt reduction plan and development of the Magnum Hunter’s core operating areas in the Marcellus, the Utica and Bakken Oil Shale. Wall Street greeted the news with great fanfare as investors pushed the stock up more than 6 percent to a new year-to-date high of $5.14. Investors are expected to closely monitor the company’s progress and success as drilling results in the company’s Utica operations are expected before year-end.
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